One of the most difficult for scalpers before trade is to determine a strategy. There is a complex trading strategies and there are simple, and make plans for entry with a specific strategy for the scalper does not have to be complex. This article exemplifies a simple trading strategy for scalping with the indicator CCI (Commodity Channel Index) for scalping. Only three steps you need to do is determine the direction of the trend, decisive momentum with indicators CCI entry and exit levels determine in accordance with risk management.
Determine the direction of the trend
First at all, to trade using simple strategy for scalping. Scalper typically use a time frame of 1 minute to 15 minutes. To determine the direction of the trend are commonly used indicator of exponential moving average (EMA). In the example NZD/USD following used EMA period 200. If the price moves above the curve line EMA-200 then assumed moderate bullish trend and momentum trader will wait for an opportunity to buy, otherwise if the price moves below the EMA-200, traders await sell opportunities.
From the picture above looks prices are still trending strongly indicated by the distance between the closing price of the EMA-200 widening. Besides price movements also form a higher high levels (a new high level higher than the previous high level) and higher low (low levels of new, higher than the previous low level) which is characteristic of an uptrend movement.
Entry moment with the indicator CCI
Because trading with a low time frame, then after knowing the direction of the trend trader should immediately determine the momentum of entry before momentum is lost and the trend changed. One indicator that could help determine the momentum of entry is CCI. Besides being used to determine overbought and oversold situation, the CCI indicator also shows the cycle of price movements or moments of change of direction of the trend, ie when there is a divergence between the direction of price movement and direction of movement of the indicator.
Because in this example the movement of the price uptrend, the trader will wait for the oversold state for the entry, when the CCI is below -100 level as shown in the image above. In contrast to a sell entry made only when the price moves below the curve line indicator EMA-200 and CCI indicator shows overbought situation.
Exit level in accordance with the risk management
Risk management is crucial in scalping because traders will usually entry several times a day. Trader can use extreme levels (high or low) before a stop loss level, or by specifying a stop loss levels on the curve line itself. Risk / reward ratio should not be higher, but try to be greater than 1: 1.
That's all, this is a simple trading strategy for scalping.
The combination of a horizontal line at the level of support or resistance and price action may be the one simple and effective forex strategies that you can apply. (Note: Price action is a way of trading to observe and analyze the formation of pin bar that happens to Candlestick chart). After we defined horizontal lines of support and resistance for the dominant, we can wait for the formation of pin bar that formed around those levels.
The importance of horizontal lines
Maybe we feel uncomfortable with many trading indicators on the chart, and want it could be trading with a few indicators but quite validly. Well, if that's what we want, maybe you can try this way, the horizontal lines and the price action. Professional traders always look at important levels on the horizontal line. They have to know that these levels are very significant and have an impact on the direction of price movement. Horizontal lines can be used as a reference for setting the level of stop loss, and will be effective when combined with price action with examining the pin bar formed.
Application of horizontal lines and the price action in trending market conditions:
Consider the following example, on each swing point we can observe the formation of the pin bar formed. In fact, the swing point is often accompanied by the formation of pin bars that indicate a reversal of the trend going. In the case of an uptrend as in this example, the pin bar on the swing point (blue circle) indicates the downtrend reversal correction, or commonly known as the end of the correction, so that the overall trend is still rising. In a downtrend market that is happening is the opposite process.
The application of horizontal lines and the price action in the sideway market conditions (range bound):
For sideway market conditions (range bound), we simply look at the formation of the pin bar formed on support levels and resistance (blue circles in the figure below). We determine the timing for the start of entry if it has really looked signal pins that ensure that the bar is still sideway market conditions, and are still in a trading range. Stop loss and profit targets can be set at a level close to the support or resistance in accordance with the direction of entry positions we take.
'Event' area in a horizontal line
Event area is the area around a horizontal line which shows strong signals for entry based on price action. Of formation of pin bar formed can happen penetration (break) or retest at a certain price level which indicates that the level is significant. For entry should be confirmed with a pin bar formed.
In the following example that has break inside bar indicates a strong signal to sell, after retest confirming that the horizontal line is really significant resistance (blue circle in the image), we can sell at the entry level slightly below the retest point.
Examples of trading with horizontal lines and the price action
In the following example EUR / USD initially sideway at 1.4100-1.4000 level (event area), then break down when it formed a pin bar and inside bar. After the retest, the price moves back down. Note the pin bar and inside bar formed and indicates the levels where we can entry.
So by combining the levels of support / resistance and pin bar that formed in the surrounding area we can find signals when the right time to enter the market.
One of the common questions that new traders learn about Forex trading strategy is a strategy which is better used? Technical or fundamental? When technical analysis is all the things associated with graphs and figures, then fundamental analysis is the opposite, that everything outside of charts and figures, such as for example, news and market opinion.
Generally, based on two strategies above, the trader will be divided into a technical trader and a fundamental trader. However, in practice, it is no trader can actually apply pure one strategy. The fact is, both strategies complement each other, so that when both are combined, the path to becoming a successful forex trader will open wider.
All traders will definitely want to get a way to survive in the forex and produce consistent profits. In this article, we will provide an easy way to identify the condition of the market, based on a combination of trading strategies, technical and fundamental.
For you who are looking for market forex trends, try to observe the state of the current market. Whether the market is a reversal, saturated, or is experiencing a reversal of the trend? To get the answers, trader must be able to seek and find the direction of price movement. Price movement chart or action chart price is the solution. If the price moves into a higher trend (graph moving upwards), then it is called Up Trend, conversely, if the price moves into the lower trend (graph moving downhill), called Down Trend. The graph below is an example of a Trend Up and Down Trend:
By observing the trends mentioned above, the trader can easily identify bias in market sentiment. Wherein, when the down-trend, bias will decrease, and vice versa when the up-trend, bias will increase.
In this situation, trader is not enough to just sell or buy and hope to be on the right track only. However, traders should be able to make purchases with a minimum price when up-trend, and sell at a price as much as possible in the event of down-trend. In other words, when prices had the opposite with your transaction, immediately get out of the transaction.
Forex trader also can use support and resistance to identify price movements. More importantly, it also can reverse the trend of the market at that moment. As in the above chart shows the price is initially being down-trend can be reversed into an up-trend.
Thus, risk management should still be used even though the symptoms can be seen and predictable market clearly.
To be able to combine technical and fundamental, traders could use the economic calendar to see whether the opportunity to buy or sell. Generally, price of the event news will provide more opportunities, so expect traders can take these opportunities to gain by entering the market at the right time. For more details, can be seen from the following picture:
In conclusion, in order to obtain consistent profits, traders should be able to look at the overall market. As expressed by Jamie Saettele (Dailyfx): "to be able to take advantage, then the trader should be able to see the reaction of the price of a story that happened, and was able to react quickly when news is being released".
Happy weekend :)
Sometimes we feel confused analysis of what we will use in our trading. Either because they can not follow the price movement, or because they cannot know the volatility of the market tend to fluctuate due to the influence of fundamentals. Well, this article will discuss how to read the news as fundamental analysis in forex. Including on economic indicators and how the reading.
What is Fundamental Indicator?
Is a fundamental indicator of world economic news that could affect currency movements. To be successful in the business world of forex trading, we must understand and know very well how to read forex economic news as fundamental analysis. In studying the fundamental analysis, there are many patterns in the determination of entry because of the news release will be a significant effect for example on the retrace and futures trading. Well, to be a fundamentalist, a trader must have extensive knowledge in interpreting data trade economy.
Basically, there are dozens of articles fundamentals are quite important or very important for us to learn. The term fundamentals in forex are very important and needs to be understood by those who will invest in forex. A particular news will greatly affect the movement of a currency pair. Here attached some terms that are often mentioned in economic news along with a brief description and its influence on the currency. Everything is explained in Indonesian to allow you to learn. By understanding the contents of the data released, is expected to be able to do dynamic traders in the forex market
Unemployment Change
This is an indicator that measures the value of unemployment over the past month. If the value of Unemployment Change America (US) rises, then the USD will decline.
Reserve Bank of Australia (RBA)
The policy of the Australian central bank was able to change interest rates.
GDP (Gross Domestic Product)
It is a measure of the total volume of production in the region. Information from the GDP will greatly affect the flow of money of a nation's currency.
Retail Sales
Sales of goods will greatly affect the marketability of the consumer.
Commodity Prices
An indicator that measures the value of growth in export commodity prices.
PMI
PMI is a composite index of the five main indicators, which include several elements, namely: orders, inventory levels, production, shipping, and labor. If the index number above 50 means expansion of industry experience, and if the figure below 50 means contraction. This index is considered as an important indicator and is considered the best indicator to measure the level of production. This index can also detect the pressure of inflation and industrial activity.
Pending Home Sales
An indicator that calculates growth in a country house reservations.
Nonfarm
An indicator that measures the national production of goods and services outside the agricultural sector.
Unemployment Claims
An indicator that tracks the number of people who failed to get unemployment insurance for the first time until last week.
Consumer Price Index (CPI)
The indicator that measures the rate of increase of goods and services charged to consumers. The increase in prices of goods and services will ultimately increase inflation, which in turn usually be offset by raising interest rates. The increase in interest rates may strengthen the currency of the country concerned.
Import Price Index
An indicator that calculates the percentage of price increase (inflation) of goods imported.
Prelim UoM Consumer Sentiment
An indicator that calculates the rate composite index based on a survey of US consumers.
Actually, forex trading activity, it is the same as trading in general, it's just that this trade involves the exchange of two currencies of different types of foreign currencies. For example, you buy British Pound using the US Dollar, then after the ratio Pound / Dollar rises, you sell Pounds and buy Dollar again. At the end of trading, you will have more dollars than before you trade.
What exactly is forex trading
The world's currencies are always in a floating exchange rate (uncertain or changing), where they are always traded in pairs. The forex currency is known in the "symbol" or the abbreviation consisting of two parts; one for first currency, and another for the second currency. For example, the USD/JPY stands for a symbol of the US Dollar (USD) and Japanese yen (JPY). Just like stocks, in the forex you can apply any tools of technical analysis on forex charts. Trader analysis can be optimized with the "symbol" of forex, which helps you to find a profitable strategy.
If you think one currency (called the second currency) will be valued against another currency, then you can exchange that currency, using the currency of the destination (called the first currency), and could do a "transaction" in it. If all goes according to plan, in the end, you will be able to make transactions on the contrary, the exchange (selling / buying) currencies that first one with another, and the gain from the transaction. For the record, in forex trading there are no dividends paid in the currency as happened in the stock market, so that the profits are generally only gain derived from the difference between the buy and sell prices.
Transactions in the Forex Market
Formerly, most of forex trading is limited to large banks and institutional traders only. However, advances in technology today have made small traders can also benefit from the many benefits of forex trading, just by using the Internet or online trading. Currently, the foreign exchange (Forex) market brokers can break down the size of the large inter-bank units into smaller ones. Thus, small traders, like you and me, can have the opportunity to participate to gain profit in the forex market.
Online transactions in the forex market conducted by dealers at major banks or known by the term 'Broker'. Banks, primary dealers, and sometimes also large speculators are major players in this trade. They are can take advantage of the liquidity of the currency market. The forex market has higher liquidity than the stock market due to more money being traded. Forex is spread between banks in the whole world, and this means that the transaction took place for 24 hours straight. Dealers in key institutions also work for 24 hours / 7 days. When you're sleeping comfortably in bed, the dealers in Europe may be actualized trying to trade currency with colleagues in Japan.
In fact, the Forex market never stopped, even during a bombing in the United States, on September 11, 2011, you can still make transactions as usual. The currency market is the largest and oldest financial market in the world. This market is also called the foreign exchange market or can be shortened to the Forex Market. Forex is also the most liquid market in the world. Price movements in the forex market are very smooth and without any gaps (gap) as commonly faced by traders in the stock market. The client may place take-profit and stop-loss order for the broker to be executed automatically when the movement arrived at a predetermined price.
Also, unlike the stock, Forex trading is done with high leverage, for example 1: 100. This means that with an investment of $ 1000, you can control $ 100,000, and increase potential returns. Some brokers also provide mini and micro account, where you can deposit a minimum of less than or equal $ 100. Of course, this is easier for anyone who wants to participate in forex trading.
Examples Forex Transactions
Say, you currently have a trading account of $ 25,000 and you are trading with a 1% margin requirement. The current quote for EUR/USD for example 1.3225/28 and you place an order to buy 1 lot of 100,000 Euro at 1.3228, with the hope the euro will rise against the dollar.
At the same time, you put a stop-loss order at 1.3178 representing a maximum loss of 2% of account equity if the prices going down. The stop loss level is 50 pips below the price order, and take profit is at 1.3378, which is 150 pips above the price order.
Thus, you are risking 50 pips to gain 150 pips. The advantage that you can get is three times greater than the losses incurred. If this can be applied consistently, it can help you to get a bigger percentage gains than losses.
How is the margin? The trade value was $ 132,280 (100,000 * 1.3228). Then the required margin deposit of 1% of the total, amounting to $ 1322.80 ($ 132,280 * 0.01).
Then, for example, as your expectations, the euro strengthened against the dollar and limit orders have to be at 1.3378 then the position will be closed. Thus, the total profit in this trade amounted to $ 1,500, assuming that each pip is worth $ 10.
After seeing the prices rise and fall later, traders are quite difficult to identify the price in the market. With a triangle pattern, traders can be helped to identify the price in the market. In a strong trend, market decisions tend to be more easily identified by the trader. It's enough to buy when the uptrend and sell in a situation that tends to decrease (downtrend). However, when the market is not decisive in determining the price to a trend, it is difficult for traders make decisions.
This situation occurs when too many trend traders are suddenly open to the emergence of a new transaction. So what should we do when there are no highs or lows in the market while we should continue to be in forex trading?
One of the suggestions that can be done is to try to wait reversal of the price of using a triangle pattern. Triangle pattern is formed by connecting line currency currency pair with the point of support or resistance. Below we can see a triangle pattern formed on GBP/JPY. Price resistance seen from the highest point of which is gradually moving towards the lowest point. At the same time, the support line can be seen down to the lowest position. Once these areas are identified, we can proceed with the strategy break
Setting up a Stop Order Breakout
Once a triangle pattern is obtained, we can begin to prepare to do a breakout. By using OCO, both buy and sell entries can be ordered at the same time.
When creating an OCO order (Order Stop), apply a second straight pending orders, one buy and one sell.
This pattern will be much help if you are not sure where the market will lead. If the price breaks above the resistance point, we buy the GBP/JPY. Conversely, if the price falls below the point of support, we sell the currency pair. It should be noted that immediately after the order is executed, the other pending orders should be removed. When creating an OCO order (Order Stop), apply a second straight pending order, one buy and one sell.
Traditionally, most traders use a ratio of 1: 2 Risk / Reward or more while applying a method breakout. This can be extrapolated by finding twice as many pips profit as when we bet using stop losses.
There are three basic elements in the foreign exchange market (Forex), which should be known by traders. These three elements are included in a trading system which is one of the main tools that must be possessed by every traders. Once the system was created, trader must know the system is working, recognize the symptoms of faults and weaknesses of the trading system, as well as optimism that the system would work fine creations. Therefore, you need to understand three important elements in the Forex market before completing a system.
These three elements are:
1. Elements of Geographic
You must know that the Forex market is one of the largest and widest in the world. He is always open 24 hours non-stop. Therefore, no matter if you are English, Japanese, American, or Singapore, market will still reach all Forex traders in the world at any time.
Most of the major exchanges are in Singapore, Hong Kong, Tokyo, Bahrain, London, New York, San Francisco and Sydney. Geographical element Forex market is what can help new traders realize how much trading going on around the world.
2. Functional Elements
Forex basic function is not to exchange currencies worldwide. When trading occurs, partner countries would convert their revenue from foreign currencies into their domestic currency. So that it is possible when the purchasing power of the country strengthened, the purchasing power of other countries might be weakened. Forex trading is very helpful in the trade of goods between countries, as well as the provision of financial credit.
3. Elements of Participants
Globally two users Forex:
a. Bank (usually referred to as the wholesale market)
b. The client or individual traders (commonly referred to as the retail market)
On these two categories there are five types of participants. The first type is the bank and non-bank. For the type of non-bank typically consists of large brokers as a fulfillment partner of funds from the client to the market. While the second type is composed of individuals, commercial enterprises, and other investments. This group consists of importers, exporters, tourists, and investors or traders. They often use the Forex market in order to increase investment. The second group often use Forex to protect their values and assets, in anticipation of reducing the risk of losses.
Investors are subdivided into types of speculators and arbitration. These people take advantage of the market to make money for themselves. They make money from Forex for themselves and act according to their wishes. It can be said that these two types of investors are likely to make a profit from the movement of currency exchange rates. Sometimes the big banks get into this group.
Another group which also falls into the Forex is the central bank. The central bank has the power to change the value of the currency, or at least try to change. Each action of changing currency values the central bank is done with a specific purpose. Unlike investors, central banks in each country aim to influence the market, so that the value of the domestic currency of their country awake and provide benefits to the state. So it is not harmed both exporters and importers.
Forex brokers are the last group of participants in Forex trading. They are the party that facilitates trade, but does not act as a partner investor or trader in the transaction. They generally charge a fee for services rendered, in the form of commission.
The trader can learn a variety of existing trading patterns by using technical analysis. One of the most useful patterns in a market that is experiencing a trend is a flag pattern. This time, we will see and identify a transaction by utilizing the flag pattern that can identify a downtrend.
Identifying Patterns
We are sure you will be able to apply the bearish flag pattern easily after understanding the following three basic steps.
First, look for flag that will be marked as the beginning of a down trend in both the down sharply or slowly.
Secondly, you must have a tolerance limit when the flag has been determined. It will be a consolidation period of falling prices. During this period, the price will probably turn up slowly. In this situation, traders are advised to wait until prices break through the lower positions of the previous trend.
Third, once prices move lower again, that's where you can find the last component required in trading with bearish flag pattern. Trading profit obtained from reversal after the price has reached the lowest trend. The price level should be determined in advance by measuring the distance pips since the decline. Then, the peak value is reduced the resistance line that has been predicted. For more details, you can see the picture below:
EUR/JPY price
The picture above is a bearish flag pattern on the daily chart of EUR/JPY. Formed from the flag pole, the trader can see the relationship began on June 21 at the 101.61 level until the 24th of July at 94.10 level. Formed from a series of points, it appears the difference of 751 pips since the decline.
From these images it appears that the price is in a consolidation phase. Once the price starts to rise gradually, you can see the formation of a bearish flag pattern. And by utilizing the pattern, you can generate a profit of 751 pips when the price dropped to a potential target is near the 91.00 level.
